Expensive stocks often command premium valuations because the market thinks their business models are exceptional. However, the downside is that high expectations are already baked into their prices, leaving little room for error if they stumble even slightly.
Separating true intrinsic value from speculation isn’t easy, especially during bull markets. That’s where StockStory comes in - to help you find high-quality companies that will stand the test of time. Keeping that in mind, here is one high-flying stock to hold for the long term and two with big downside risk.
Two High-Flying Stocks to Sell:
Hyatt Hotels (H)
Forward P/E Ratio: 40.5x
Founded in 1957, Hyatt Hotels (NYSE: H) is a global hospitality company with a portfolio of 20 premier brands and over 950 properties across 65 countries.
Why Do We Pass on H?
- Revenue per room has underperformed over the past two years, suggesting it may need to develop new facilities
- Anticipated sales growth of 3.4% for the next year implies demand will be shaky
- Push for growth has led to negative returns on capital, signaling value destruction
Hyatt Hotels is trading at $129.96 per share, or 40.5x forward P/E. Read our free research report to see why you should think twice about including H in your portfolio.
Kadant (KAI)
Forward P/E Ratio: 31.9x
Headquartered in Massachusetts, Kadant (NYSE: KAI) is a global supplier of high-value, critical components and engineered systems used in process industries worldwide.
Why Is KAI Not Exciting?
- Muted 7.2% annual revenue growth over the last two years shows its demand lagged behind its industrials peers
- Sales are projected to remain flat over the next 12 months as demand decelerates from its two-year trend
- Earnings growth underperformed the sector average over the last two years as its EPS grew by just 3.4% annually
At $323.55 per share, Kadant trades at 31.9x forward P/E. If you’re considering KAI for your portfolio, see our FREE research report to learn more.
One High-Flying Stock to Watch:
BrightSpring Health Services (BTSG)
Forward P/E Ratio: 36.8x
Founded in 1974, BrightSpring Health Services (NASDAQ: BTSG) offers home health care, hospice, neuro-rehabilitation, and pharmacy services.
Why Do We Watch BTSG?
- Annual revenue growth of 20.9% over the last two years was superb and indicates its market share increased during this cycle
- Estimated revenue growth of 9.5% for the next 12 months implies its momentum over the last two years will continue
- Annual earnings per share growth of 6.9% over the last three years modestly outpaced its peers
BrightSpring Health Services’s stock price of $23.13 implies a valuation ratio of 36.8x forward P/E. Is now a good time to buy? See for yourself in our full research report, it’s free.
High-Quality Stocks for All Market Conditions
Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.
While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today for free.
